Stunting SCHIP’s Growth

While the fight over whether to expand the State Children’s Health Insurance Program (SCHIP) has focused on congressional legislation and presidential vetoes, the Bush administration might have won a big part of the battle with a mundane weapon that doesn’t get much notice: a federal guideline.

The guideline blocks states from widely expanding SCHIP until they reach a numerical objective for the program that no state has reached and that many state officials say is impossible.

The rule, issued by the U.S. Department of Health and Human Services (HHS) in August, is based on a principle that many can agree on: Reach more children who are now eligible for SCHIP before expanding the program to other children in less poor families. It says states can expand coverage from SCHIP’s current income eligibility standard only after they’ve enrolled 95 percent of the children who are now eligible in either SCHIP or Medicaid.

When Youth Today sought to find out how many states have met those criteria, it found not only that the answer is zero, but that state and federal officials aren’t even clear about how to calculate the figure.

“Everything I’ve read or heard from every state is that nobody will be able to meet 95 percent” in the foreseeable future, said John Folkemer, Maryland’s deputy secretary for health care financing.

The new restriction, and the clash between Congress and the White House over SCHIP funding, bring a fundamental question to the fore: Is SCHIP a limited program for covering only the poorest of children, or a successful experiment that should be expanded to others?

“I think this is the perfect point to have that discussion,” said Oregon Department of Human Services Director Bruce Goldberg. “No program this successful should ever stay static.”

The Bush administration, however, sees SCHIP expansion as the type of mission creep that infuriates many fiscally conservative Republicans: a social welfare program that expands beyond its original intent and eventually establishes itself as an expensive entitlement.

New Restrictions

Under SCHIP, states get matching funds from HHS to insure children under 19 who live in households with incomes of up to 200 percent of the federal poverty level. The program is funded at $5.7 billion this year, and has been credited with helping to reduce the number of uninsured children from the time it began in 1997 until 2005.

Subsequent federal and state budget cutbacks caused reductions in SCHIP funding. According to the U.S. Census Bureau, the number of uninsured children increased from 7.7 million in 2004 to 8.7 million in 2006.

In the recent public battle over SCHIP’s reauthorization, Congress tried to add funding to expand the program, while President Bush has proposed a smaller increase that would keep enrollment at or below current levels.

The Bush administration says a large expansion of the program is a dangerous step toward taking children from private insurance providers, at government expense.

Some state SCHIP administrators disagree. “Insurance companies have been withdrawing from reaching kids” in lower income brackets, said David Parella, Connecticut’s director of medical care administration.

But despite significant media coverage of the funding dispute, the new rules appear to limit expansion of the program, regardless of the funding.

Those rules say that in order for a state to expand income eligibility beyond 250 percent of the poverty level, HHS must have “assurance that the state has enrolled at least 95 percent of the children in the state below 200 percent of the federal poverty level who are eligible for either SCHIP or Medicaid.”

The rules would also require that youth be uninsured for a year before enrolling in SCHIP.

The 200 percent income requirement has never been absolutely firm. Some states opt to cover fewer children; Oregon, for example, covers youth in households at up to 175 percent of the poverty level. Other states have secured waivers from HHS to expand eligibility for coverage. New York, for instance, plans to expand SCHIP over the next four years to households at 400 percent of the poverty level.

States that have obtained waivers to expand income eligibility would have to scale back until they hit the 95 percent mark at the lower income level. About 20 states would have to either scale back or postpone expansion.

Washington plans to expand the income eligibility to 300 percent of the poverty level, and Gov. Christine Gregoire (D) said last month that she’s considering suing the federal government over the new restrictions.

How to Measure?

Many children’s health care advocates say the 95 percent rule has effectively set a goal that no state appears to have reached, and perhaps few can.

“The problem is, there is this universe of kids that are uninsured, and it’s hard to determine which are eligible for SCHIP or Medicaid,” said Ana Compain-Romero, spokeswoman for the Missouri Department of Social Services. “They have given us no guidance on how to calculate” this figure.

Even the Centers for Medicare and Medicaid Services, which administers SCHIP, is unclear about how states will measure their numbers of eligible youth. Mary Khan, spokeswoman for the centers, said she did not know how the figure would be calculated, but added that projections of each state’s SCHIP and Medicaid-eligible youth were made by the Census Bureau when SCHIP was enacted 10 years ago.

In a letter to HHS Secretary Mike Leavitt, the National Association of State Medicaid Directors wrote, “This reversal of a decade-long policy of state flexibility to expand coverage is inexplicable and deeply troubling.”

The White House says plenty of uninsured poor youth remain to be enrolled under the current regulations. In June, HHS issued a fact sheet, based on a study by the Urban Institute’s Income and Benefits Policy Center, saying that of the 4.9 million youth uninsured in 2003-04, 1.1 million were eligible for either Medicaid or SCHIP.

Whatever measurement is used will almost certainly show that few states are close to insuring 95 percent. The 70- to 80-percent range seems most common. For example, the Missouri DSS estimates that it covers about 78 percent of the youth who are Medicaid- or SCHIP-eligible and whose households fall within the 200 percent guideline, Compain-Romero said.

In Oregon, Goldberg said that several strategies could increase enrollment. For example, Oregon is trying to increase its coverage of all eligible youth from an estimated 85 percent to 95 percent by switching enrollment from biannual to annual, and by spending more on outreach to poor families.

Other strategies that have been tried by some states, and have been laid out by health care advocates Families USA and the Kaiser Family Foundation, include creating SCHIP coverage partnerships between nonprofits and businesses, simplifying SCHIP applications, and structuring a closer tie-in between the private insurance of parents and the SCHIP coverage for their children.

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